Charity that Fattah aided gets scrutiny

Starting in 2005, Rep. Chaka Fattah (D., Pa.) helped steer more than $3.3 million in congressional earmarks to a nonprofit run by former staffers that pledged to use the money to help needy schoolchildren.

But now the money is gone, the charity that received the earmarks is closed, and the FBI has set its sights on finding out what happened.

This month, federal investigators began questioning spending by the now-defunct Educational Advancement Alliance - run at the time by former Fattah congressional aide Karen Nicholas - on a former apartment building in the Wynnefield section of the city.

Agents have visited the headquarters of Domus Inc., a Center City company the alliance contracted to rehab the building and turn it into the Center for Development of Math, Science and Technology with the Department of Energy grants.

Domus officials took possession of the building two months ago after the nonprofit was unable to pay the company's renovation bills.

The building itself - a stone structure nestled in a residential neighborhood, with new additions in white siding - now sits empty and unattended. It is not clear, sources close to the investigation said, whether the nonprofit opened the planned math and science center there at all.

"We took a deed in lieu of foreclosure," Domus attorney Eric Milby said. "We got less than we were owed."

Nicholas, who was director of constituent services in Fattah's Philadelphia congressional office from 1995 to 1997, did not return multiple calls for comment for this article.

Neither did the nonprofit's other former executives - Raymond Jones Jr., a former Fattah aide who ran for City Council in 2007, and Roger Jackson, who now works as Fattah's chief of staff.

For his part, the congressman, who was reelected to an 11th term this month, said he was proud of all that the Educational Advancement Alliance had achieved in its more than two decades of operation, including helping 27,000 youths pursue college degrees.

"I am proud to have helped secure federal funding for hundreds of universities, nonprofit organizations, and community groups," he said in a statement. "However, no congressional office - my office included - monitors the use of those funds. That responsibility rests with the funding agencies."

The FBI's interest in the Wynnefield building is just the latest instance of a project attracting federal scrutiny in a long-running investigation into the misuse of taxpayer funds by nonprofits tied to Fattah.

The probe has already snared two former members of the congressman's inner circle, who acknowledged playing a role in moving an unrelated $600,000 from the Educational Advancement Alliance to pay off what authorities have described as an illegal campaign debt from Fattah's failed 2007 mayoral bid.

Those men - former campaign advisers Gregory Naylor and Thomas Lindenfeld - pleaded guilty to federal charges this year and are cooperating with the investigation.

Fattah, a senior member of the powerful U.S. House Appropriations Committee, has repeatedly said he had never been involved in any illegal conduct or the misappropriation of taxpayer funds.

It was through his oversight of federal appropriations that Fattah helped direct the $3,306,000 in earmarks from the U.S. Department of Energy to the Educational Advancement Alliance starting in 2005.

The alliance had recently bought the apartment building at 5300 Wynnefield Ave. for $450,000 from a North Philadelphia landlord and planned to use it as the headquarters of its math and science center.

In grant documents, the nonprofit described the proposed facility as a place that would "help low-income students through workshops, classroom instruction, and tutorial service."

But renovation work was slow to start.

It was not until late 2010 that Domus Inc. began a nearly $700,000 remodeling project, putting an addition on the Wynnefield Avenue building and installing a four-story elevator and new utilities - work it completed in July 2013.

The alliance, however, never paid for the job, Milby said in an interview last week.

Tax records show that by then, the nonprofit was struggling financially.

In its latest filing, from December 2013, the alliance reported net liabilities of $1.1 million, despite listing $28.3 million in public support from 2007 to 2011.

Meanwhile, audits by the Justice Department's inspector general released last year called into question the charity's spending of other grant money. The report criticized the charity for unauthorized payments on consultants, no-bid contracts, and other spending.

No matter how hard Domus pressed for payment, the nonprofit appeared to be stalling, Milby said. In January, Domus filed a $679,597 lien against the Wynnefield property, hoping to recoup the money it was owed.

The dispute was eventually resolved in September, when Nicholas and former alliance president Raymond Jones handed the property over to a limited-liability corporation tied to Domus to resolve the debt.

But Milby contends the company got far less in the deal than it was owed. He estimated the building would now fetch only about $400,000 in a sale because any future buyer probably would not want all the improvements the alliance ordered. The property is assessed at $289,100.

As for the $3 million in grant money the nonprofit was supposed to have sunk into the building's rehab and operation, Milby said far less had been spent on the renovation.

Domus chief executive Edward Hillis now wants to sell the troubled property.

But federal officials may have the last word.

One key question has emerged in their investigation of the Educational Advancement Alliance's grant spending, said sources close to the investigation: whether the nonprofit ever had any authority to give the building, remodeled with federal money, away in the first place.